TiVo in the US has definitively turned the corner, increasing the number of Tivo subscribers in the quarter for the first time in four years, turning a 33,000 deficit last quarter into a 117,000 gain this quarter. This long awaited milestone was greeted in the current US investment market with a yawn, and no significant rise in share value, partially because TiVo is still throwing off losses, a fact that is almost certain to change as its MSO based subscriber base continues to grow in the next few quarters.

TiVo has over $600m in liquid assets but is valued at just $1.1bn putting a total enterprise value on the business right now of just $500m, an exceptionally low value given that its quarterly ever been at almost $65m. You have to go back to 2008 to see TiVo figures that high and back to 2007 to see them slightly exceeded.

The lack of share price movement can be put down as much to the state of the US markets right now as to the performance of TiVo. In fact right now, the fact that no one has sold TiVo stock sounds like a good performance.

One of the key breakthroughs has been at Virgin in the UK, where in a single quarter it has jumped from 50,000 installed TiVo customers to 220,000, as its deployment picks up speed. It has similar deals at Ono in Spain and at new cable customers including RCN, Suddenlink, Grande and Charter in the US, which will begin to be additional over the next two quarters.

Tom Rogers, President and CEO of TiVo, said, "This was a great quarter and represented a significant step in our growth strategy ... We also exceeded our quarterly guidance on service and technology revenues, Adjusted EBITDA and net income... Additionally, DirecTV intends to launch its TiVo offering in select markets in December with a nationwide rollout to follow early next year. All of this is a testament to our leadership in advanced television and our ability to drive meaningful solutions to market."

For the third quarter, service and technology revenues were $51.8 million, growing 25 per cent year on year compared to guidance of $49m to $51m. Adjusted EBITDA was a loss of $13.9m, compared to Adjusted EBITDA guidance of a loss of $17m to $19m and TiVo ended the quarter with 2.04 million total subscriptions. At its height in 2007, we think it once reached 4 million.

Rogers continued: "Demand for Virgin Media's TiVo offering is quickly growing throughout the UK. Just six months after launch, Virgin Media said that it had more than 220,000 TiVo subscribers live, up from the 50,000 just three months prior. Even more impressive is that 40 per cent of these TiVo subscribers are new to Virgin Media."

TiVo says that although RCN has yet to really affect the mix, its early customers have also experienced higher customer satisfaction and lower churn in TiVo homes.

The company also slowed churn in Tivo-owned subscribers down to 1.5 per cent per month and pointed to its upcoming integration with Comcast VoD currently in field trial, as a potentially critical design win, which will drive TiVo-owned subscriptions (the customers will sign with TiVo, not Comcast, for the service).

TiVo said it had also delivered 1.95 billion interactive advertising impressions, which means its advertising revenue is coming up close to that of many cable companies.

If you factor in potential court wins at AT&T and Verizon, which might lead to licence deals with their suppliers, Microsoft and Motorola, then the upside on TiVo right now is considerable. The company's next step is to get a settlement and cut litigation spending and it also says that R&D spend is currently artificially high. It also says that it has more distribution deals, like Virgin and Charter, up its sleeve.

TiVo put its guidance for service and technology revenues in the range of $48m to $50m for the coming quarter, a number it is likely to beat comfortably, as well as a net loss in the range of $31m to $33m, again something it could surprise us on.

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